A G Automotive Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that order invoking Rule 86A of the Central Goods and Services Tax Rules, 2017 [CGST] blocking Electronic Credit Ledger without providing pre-decisional hearing is liable to be quashed. Also held that order failed to contain independent or cogent reasons for blocking.
Facts- The issue involved in the present petition is that the Electronic credit ledger of the petitioner was blocked by the impugned order dated 26.03.2025, by invoking Rule 86A of the Central Goods and Services Tax Rules, 2017. Petitioner has mainly contested that before passing the impugned order, pre-decisional hearing was not provided to the petitioner nor does the impugned order contain any reason to believe as to why it was necessary to block the Electronic credit ledger.
Conclusion- Held that in the instant case since no pre-decisional hearing are provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A blocking of the Electronic credit ledger of the petition does not contain independent or cogent reasons to believe/accept by placing reliance upon reports of enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by Division Bench, the impugned order deserves to be quashed.
